What to Expect from Your Merchant Account: Typical Rates and Fees
It can be difficult to pinpoint the exact rates and fees to be expected from a merchant account because they will vary from provider to provider. That does not mean that it's entirely impossible to prepare, however. Simply getting a ballpark idea of your merchant account typical rates and fees can help get you started.
The Application and Setup Fees
When the time comes to set up your merchant account, one of the first fees you will need to expect is for the application process. It is possible that your provider does not charge an application fee, but many do. The amount charged (or whether or not there is a charge at all) can be one of the criteria you use when choosing the right merchant account for your business needs.
In addition, merchant account typical rates and fees often include one for setup. This should be a one-time charge. Again, you will likely want to use this as a measure when shopping for your merchant account. In some cases, the setup fee is not paid all at once, rather it is prorated out over the course of several purchase or lease payments.
Paying for Hardware and Software
The way you pay for the terminal and accompanying software will depend on whether or not you are purchasing or leasing it. The price will vary, depending on the company. Be aware that merchant account
typical rates and fees often do not include your state's sales tax. You may also be expected to pay an added charge in case of damage to or loss of the equipment.
There can be additional fees in this category if you are switching from one provider to another. This is because some new programming has to happen to update the system you already own. This is a typical fee, but the savvy consumer needs to keep an eye on it to ensure the charges and fees aren't getting out of hand.
Every time a transaction is made through your merchant account, a portion of that price will go toward the system. For example, retail businesses will generally have a "discount rate" of anywhere from 1.5% to 4% per transaction. The fee will be on the higher end for online businesses, as the risk for fraud is higher in those types of transactions.
In addition to the discount rate, there is another flat fee that is likely to be charged for each transaction. In the same manner as the discount rate, online businesses can expect to pay a higher fee.
Gateway Access Fees
The provider through which you have your merchant account is quite possibly not the actual company that makes the connection. This company will be referred to as a "secure payment gateway provider," and it will take yet another monthly fee in order to allow you to accept credit card purchases.
A Few More Merchant Account Typical Rates and Fees
The items listed here are only a portion of what can be expected from merchant account typical rates and fees. In addition to those mentioned above, you can expect a fee for closing out the terminal each day, for receiving a monthly statement, a monthly minimum fee to the bank, and possibly an address verification system charge, among others. Other possibilities include a "chargeback" when a cardholder reverses charges on a card and even an annual fee.